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On November 16, 2006, GAO testified before the Permanent Subcommittee on Investigations, Committee on Homeland Security and Governmental Affairs, on the results of our audit on the Defense Travel System (DTS). This letter responds to a question from Senator Coburn that we were asked to answer for the record. The question and our response follow.

We fully recognize the challenge the Department of Defense (the department) faces in attempting to improve the efficiency and effectiveness of its business operations. The fact remains, however, that the results of an economic analysis are intended to help management decide if future investments in a given endeavor are worthwhile. In order to provide management the most realistic information possible to support decision-making in this area, it is imperative that an economic analysis be supported by valid assumptions. However, we found that the underlying assumptions were not valid, particularly in regard to the estimated amounts for the Navy and Air Force. Moreover, the department did not provide any new data or related documentation in its comments that were counter to our finding. As a result of these factors, we continue to believe that the estimated annual personnel savings of $54.1 million are unrealistic.